UK Personal Allowance – A Guide for Non-Residents

Additionally, the personal allowance can be higher if the individual is eligible for additional allowances, such as the Blind Person’s Allowance.

As a UK non-resident, you only pay tax on your UK-source income, but you can also claim back tax and, if eligible, claim UK personal allowances on any UK income received in the current tax year or the last four tax years.

But when do non-UK residents apply for the UK’s tax-free personal allowance? Let’s go into the details.

Who Can Claim the Tax-Free Personal Allowance?

You’ll get a tax-free personal allowance on UK income each year if any of the following apply:

• You’re an EEA national (subject to specific conditions and relevant agreements)
• You’re a British Citizen (including those covered under the British Overseas Territories Act 2002)
• You’re a resident of the Channel Islands or the Isle of Man
• You’re a person who has previously resided in the UK and is resident abroad for the sake of their health or that of a member of their family who is resident with the individual
• You’re a Crown servant
• You’re a person employed in the service of any territory under His Majesty’s protection
• You’re a person employed in the service of a missionary society, or
• You’re a person whose late spouse or late civil partner was employed in the service of the Crown

You may also be eligible if the tax-free personal allowance is granted under the double-taxation agreement between the UK and the country you live in.

What Types of Tax-Free Allowances are Available to Non-UK Residents?

The following allowances and nil rates of tax are available to all non-UK resident taxpayers:

• the personal savings allowance (PSA): Basic rate taxpayers: entitled to a PSA of £1,000. Higher rate taxpayers: entitled to a PSA of £500. Additional rate taxpayer: not entitled to any PSA.

• the starting rate for savings of £5,000 (only applicable if your savings income falls within the first £5,000 of taxable income).

• the dividend allowance of £500

• the trading and miscellaneous income allowance of £1,000.

• the property allowance of £1,000.

How to Claim Tax-Free Personal Allowance as a Non-UK Resident?

If you are not a UK resident but qualify for the personal allowance as an EEA national, a UK national, or a resident of a country with a double taxation agreement granting the allowance, HMRC may require you to either:

• complete the relevant section in the residence, remittance basis etc supplementary pages (SA109) of the self-assessment online form; or

• make a claim using form R43 (This form allows you to claim personal allowance and request a refund if you’ve overpaid tax on your UK income.)

Note: You should not complete a form R43 if you are filing a self-assessment online form for the UK. You can obtain form R43 by telephoning HMRC, or you can download it from GOV.UK. You can also find contact details for HMRC on GOV.UK.

Information You’ll Need to Claim?

When making a claim, you’ll need to inform HMRC of your total income for the entire tax year if you left the UK part way through the year. This includes all income earned from 6 April up to the date you left.

You’ll need to tell HMRC:

• the date you left the UK — if you were previously resident in the UK
• your current address
• your UK National Insurance number — if you have one
• your phone number, including international dialling code

You’ll also need to tell HMRC about:

• Dividends from shares in UK companies, distributions from UK authorised unit trusts, and open-ended investment companies

• Income from trusts, settlements, or estates

• Interest from national savings, UK banks, building societies, and other deposit takers, as well as alternative finance receipts

• Rent from UK property (if over £2,500, you'll need to register for self-assessment)

• Taxable state benefits

• UK life insurance policies, life annuities, or capital redemption policies

• UK State Pension benefits

• Work pensions and retirement annuities

• Any other UK income

Conclusion

Non-UK residents may qualify for the UK Personal Allowance, but eligibility depends on individual circumstances and double taxation agreements. UK tax law is complex, making it essential to confirm residency status, check treaty provisions, and understand the claiming process to minimise tax liability. Seeking professional advice from a qualified tax advisor, such as Taxd, ensures compliance with regulations and helps maximise available tax benefits.

FAQs

1. Can non-residents claim personal allowance in the UK?

If you're not a UK resident, and eligible to claim the UK personal allowance, then you can claim the personal allowance at the end of each tax year in which you have UK income. To claim personal allowance, you must either submit a self-assessment tax return (incl. SA109) to HMRC or send form R43 to HMRC (if self-assessment is not required).

2. Do non-UK residents pay tax on UK dividend income?

Non-UK residents are subject to UK tax on dividend income from UK companies. For most non-residents, UK dividend income qualifies as disregarded income, meaning it is taxable only up to the amount deducted at source. Since UK dividends are paid without withholding tax, non-residents typically do not have a further UK tax liability on them.

However, the tax treatment of UK dividends in the non-resident’s home country depends on local tax laws and any applicable double taxation agreement (DTA) between the UK and their country of residence. Non-residents should review their domestic tax obligations and potential DTA relief to avoid double taxation.

3. What is disregarded income for non-residents in the UK?

Disregarded income (sometimes referred to as ‘Excluded income’) is a specific tax treatment option for non-UK residents relating to certain UK-source investment income, primarily interest, and dividends. Under this option, the UK tax liability is limited to the amount of tax deducted at source. Non-residents can choose to be taxed under normal rules (with a personal allowance) or under the disregarded income rules, which limit UK tax liability but remove the personal allowance benefit.